[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16042]
[[Page Unknown]]
[Federal Register: July 1, 1994]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34260; File No. SR-GSCC-94-5]
Self-Regulatory Organizations; Government Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change Relating to GSCC's Fee Structure
June 27, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 22, 1994, the
Government Securities Clearing Corporation (``GSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which items have
been prepared by GSCC. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\15 U.S.C. 78s(b)(1) (1988).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change modifies GSCC's fee schedule to establish
fees for new services provided in connection with GSCC's auction
takedown proposal and for certain services for which GSCC does not
currently charge.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, GSCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. GSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
After a review of its fee structure, GSCC has determined that
modifications are necessary and appropriate in order to establish fees
for: (1) New services that will be provided in connection with GSCC's
``auction takedown proposal'' and (2) certain current services for
which GSCC does not currently charge. This rule filing provides for
these fee structure modifications, which will become effective on
August 1, 1994. A discussion of the new fees that are being established
and the reasons for them follows:
1. New Fees in Connection With the Auction Takedown Proposal
Earlier this year, GSCC received approval from the Commission of a
proposed rule change (File No. SR-GSCC-94-1) that with regard to
Treasury security purchases made at auction by members of GSCC's
Netting System (``netting members'') authorizes GSCC to: (1) Accept and
report data on such purchases through GSCC's Comparison System; (2) net
the purchases with when-issued trades of such members in the same
securities through the Netting System; and (3) assume responsibility
for the delivery of the purchased securities.
One aspect of this proposal (known as the ``auction takedown''
proposal) has GSCC provide a mechanism for ensuring timely delivery of
needed auction purchases to a member that believes that by virtue of
its secondary market trading it will have on issue date a net short or
flat position or a long position that is smaller than the amount of
auction purchases that it requires in a particular CUSIP. To accomplish
this, each such member is able to request (a ``priority auction
delivery request'') on a CUSIP-by-CUSIP basis that GSCC deliver to it
needed auction purchases immediately after GSCC has received the
securities from the Federal Reserve Banks on issue date.
By this rule filing, GSCC establishes a fee of $1.00 for the making
by a member of a priority auction delivery request. This fee is the
same as GSCC's fee for the netting of one side of a trade.
The rule filing authorizing GSCC to implement the auction takedown
proposal also authorizes GSCC more generally to establish a mechanism
for taking in data on members' activities in eligible securities from
sources such as exchanges and other clearing corporations and to treat
such data under its rules as compared trades to the same extent as if
the data had been compared through the matching by GSCC of data
submitted by two members.
By this rule filing, GSCC establishes a member fee of $.50 for the
processing and reporting of data on one side of a trade received from a
locked-in trade source on a locked-in basis. This fee is the same as
GSCC's lowest fee for the entry by a member of one side of a trade for
comparison processing and reporting.
2. Fees for Current Services
GSCC has determined that it is now appropriate that the costs
incurred by GSCC in providing services that GSCC has provided to
members to date without charge be covered by direct charges. Each of
these services and charges is discussed below.
a. Modifications and cancels. GSCC currently charges for the entry
by a member of one side of a transaction in an eligible security for
comparison processing and production of reports. In addition to the
direct entry of trade data by a member, each member also has the
ability to input to GSCC a modification and/or cancellation of
previously-transmitted data. (Generally, a modification to or
cancellation of trade data can be done unilaterally by a member only if
the trade has not already been compared.)
GSCC has not to date charged for such modifications and
cancellations even though it incurs costs in processing and reporting
those requests. The lowest charge to a member for the entry of trade
data (i.e., trade data entry involving computer-to-computer input and
output) is $.50 per side. While the costs of processing modifications
and cancellation messages are roughly equivalent to those associated
with the creation of a transaction, in order to encourage members to
submit modifications and cancellations to existing trade data, GSCC is
setting the fee for the modification to or cancellation of one side of
a trade at $.25 per such modification or cancellation.
b. Terminal access fee. GSCC currently provides without charge
terminal access to its automated system to a growing number of its
members. In order to offset the costs associated with the provision of
terminal access, which include purchase and maintenance of hardware
equipment and telephone lines, communication engineering support, and
other charges imposed by the Securities Industry Association
Corporation (``SIAC'') (GSCC's facilities manager), as well as the
costs of training participants and of the monitoring of their terminal
use, GSCC is imposing a charge for access to GSCC's system of $150 per
month per terminal.
c. Bulk data communication connection fee. GSCC also currently
provides to members without charge bulk data communication access to
its automated system. In order to offset the costs associated with the
provision of such access, which are similar to but generally greater
than those costs associated with the provision of terminal access, GSCC
is imposing the following charges for differing types of bulk
communication connections to its system: (i) The charge for a bulk
communication connection via a shared hunt group is $150 per month;
(ii) the charge for a bulk communication connection via a dedicated
dial port or leased line is $450 per month per port or line; and (iii)
the charge for a bulk communication connection to GSCC via a dedicated
digital leased line is $600 per month per line.
It should be noted that certain GSCC members already pay GSCC's
affiliate, the National Securities Clearing Corporation, which also
uses SIAC as its facilities manager, a bulk data communication
connection fee. GSCC will not impose a duplicative fee on such members.
(b) The proposed rule change will fairly reflect the costs incurred
in GSCC in providing certain services to its members and, thus, is
consistent with the requirements of Section 17A of the Act and the
rules and regulations thereunder.\2\
---------------------------------------------------------------------------
\2\15 U.S.C. 78q-1 (1988).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
GSCC does not believe that the proposed rule change imposes any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Comments on the proposed rule change have not yet been solicited or
received. Members will be notified of the rule change, and comments
will be solicited by an Important Notice. GSCC will notify the
Commission of any written comments received by GSCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act and subparagraph (e)(2) of Securities
Exchange Act Rule 19b-4 in that the proposed rule change establishes or
changes a due, fee, or other charge imposed by GSCC. At any time within
sixty days of the filing of such proposed rule change, the Commission
may summarily abrogate such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission any person, other than those that
may be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of GSCC. All submissions
should refer to file number SR-GSCC-94-5 and should be submitted by
July 22, 1994.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-16042 Filed 6-30-94; 8:45 am]
BILLING CODE 8010-01-M
